3 Customer Insights from Top Franchise Execs

3 Customer Insights from Top Franchise Execs

Service Management Group (SMG) recently conducted interviews with top franchise executives. We asked them, "How do you go beyond platitudes about customer service to systems that engage customers and deliver marketing impact through a superior customer experience?" During these conversations, executives critiqued their customer experience management programs and shared what's next. Three key business insights emerged from our study.

1) How customer experience metrics predict financial results is not widely understood.

Executives ask, "What's the impact of customer satisfaction on the bottom line?" and are looking to their customer experience measurement model to provide the answer. To senior leaders, it's not about measurement of satisfaction, it's about revenue-driven management of the customer experience. If a company's customer experience metrics are scores such as overall satisfaction, intent to return, intent to recommend, etc., then improvements in those metrics must correlate with business metrics like comp sales growth, average spend, and share of customer wallet.

Yet only a fraction of the executives we spoke with think franchisees and their employees really understand the connection between customer experience results and the financial performance of the organization. On the other hand, these same executives believe the majority of senior franchisor management sees the connection. This discrepancy points to the demand for more compelling links to financial performance and more effective communication. Even for franchise systems that have established financial linkage, the passage of time plus turnover requires frequent reinforcement to stoke the passion that drives relentless action to win customer loyalty.

2) Without focused action to improve results, why measure?

Executives are looking for more than just scores--they want to know how to win. One executive said, "We invest to get all of this feedback from our customers, but franchisees and unit managers need to execute location-specific improvement plans to make the investment pay off. In the view of our executive panel, the best real-time customer experience dashboards for operators answer three questions: 1) Where should I focus? 2) What are my customers saying? 3) How do I compare to peers? When unit-level managers and team members have this information, they are motivated to concentrate their actions to improve where it matters most to their customers


Managers are also looking for guidance in service recovery. Mistakes happen--they can't be avoided. But losing a customer over a mistake can be avoided. When customers request to be contacted through a customer survey that reports results in real time, managers at the unit level can respond to dissatisfied customers immediately. If store managers neglect to close the service recovery loop quickly, several executives have business rules that escalate the follow-up task to above-the-store-level managers, and even to the CEO.

3) Analytics are attracting wide interest among industry leaders.

One executive said, "We were delighted to learn through text analytics how we could reduce service costs by $3 million annually while actually improving our customer experience." Whether customers are highly likely to recommend or highly dissatisfied, operators want to know why. Text analytics adds the "why" to the "what." Many executives use text analytics to turn huge volumes of their customer comments into quantitative insight that helps them understand trends and sentiment around topical categories such as marketing campaigns, products, or the service of the staff. These insights are literally "new knowledge" franchisors can seize upon to create performance advantages not available to competitors.

The new vanguard of data-driven franchisor leaders are adopting location analytics to see where and when customers are visiting their franchised locations, and the locations of their competitors. Location analytics comes from using the GPS data on consumers' smartphones to detect when they visit specific brands. Executives see not just their own brand's visit frequency, but total share of customer visits versus specific competitors. Then, by triggering surveys post-visit, consumers explain why they choose certain brands and locations, or why not. Franchisors are seeing named competitor benchmarks that show how customers perceive their relative strengths and weaknesses, which leads to improvements in marketing and operations.

What's next?

Historically, "customer intelligence" referred to collecting and analyzing information about customers' details and their activities, in order to cement customer relationships, drive sales growth, and improve strategic decisions. What's new, and exciting, is the breathtaking pace of advanced technologies that enable powerful new customer insights, especially for franchisors.

While operational excellence is vitally important for a franchise system, customer insights open up creative ways of thinking about, testing, and finally implementing new ideas that drive profitable sales growth system-wide. To paraphrase Einstein, "The thinking that got us where we are is not sufficient to get us where we want to go."

SMG Chief Evangelist Jack Mackey helps operators improve loyalty and drive growth. Contact him at 816-448-4556 or jmackey@smg.com.

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